A rare decline in November sales, its first in a decade, last week landed Wal-Mart on the front page of The New York Times, under the headline “Wal-Mart Trips as it Changes a Bit Too Fast.” “The stumbles seem to resurrect the perennial question,” wrote Michael Barbaro, “Is Wal-Mart too big for its own good, making it impossible to achieve the gravity-defying growth that Wall Street has counted on for four decades?”

Not necessarily, he cautioned. “[W]hat is happening now appears to be more complicated than Wal-Mart hitting a wall. It may simply be changing too fast, acting more like a start-up than a company with 6,000 stores, 1.3 million employees and sales of $312 billion.”

Rapids shifts by competitors such as Target and Best Buy with trendier offerings seemed to be drawing some customers away. Wal-Mart’s responses haven’t always worked.  Attempts to fix particular problems were underway. In a “symbolically important adjustment,” Barbaro concluded, the company will slow the rate at which it expands US floor space in 2007 to 7.5 percent, from the 8 percent of recent years.

What the Times’ story failed to mention was the news the paper had printed two days before, that world’s biggest retailer had beat out a British supermarket chain, Tesco, to become the first foreign firm to enter the booming Indian retail market, where, at the moment, there are no large chain stores. 

Bharti Enterprises, one of India’s biggest business groups, announced that it would open several hundred Wal-Mart franchises during the next five years, stores owned by Bharti but operated under the Wal-Mart names, with logistics, purchasing and support from the American firm. “We’ve nothing against Tesco. They know their job.” Bharti’s Rajan Mittal told the Financial Times (which played the story on its front page). “But we felt Wal-Mart, on a big scale, was more of a fit.”

In other words, although it is already the largest company in the world, Wal-Mart still is something of a start-up, seeking to become its dominant retailer.  In 2004, it handled 8.8 percent of US retail sales (excluding automobiles) It operates, in many cases as the biggest or second biggest retailer, in Argentina, Brazil, Canada, China, Costa Rica, El Salvador, Guatemala., Honduras, Japan, Mexico, Nicaragua, Puerto Rico and the United Kingdom. (It is not uniformly successful in these expansions:  it recently sold its operations in Germany and Southern Korea.)

Not since the 1920s, when chains like Sears & Roebuck and Montgomery Ward fanned out along America’s railroad lines to change the face of retailing, has there been anything like it. Wal-Mart has gone further, reshaping American commerce along its highways, locating its stores on edges of towns, or equidistant between them, changing the very landscape in the process.  (Founder Sam Walton routinely scouted locations from a helicopter, observing traffic flows.)

The retailer has gradually reshaped manufacturing, as well, through its enormous buying power. Wal-Mart accounts for 28 percent of Playtex’s sales, 25 percent of Clorox’s, 21 percent of Revlon’s, 13 percent of Kimberly-Clark’s and 17 percent of Kellogg’s. Last year’s acquisition of Gillette by Procter and Gamble was largely a response to Wal-Mart’s growing clout. More such combinations are sure to follow.  

Now even flows among nations are affected. Wal-Mart purchases more than 15 percent of all the consumer goods that the US imports from China — $18 billion in 2004, or something more than 10 percent of its cost of goods. Virtually all its apparel comes from low-cost countries. Through its political action committee, it has become an influential advocate of free trade policies, most recently the Central American Free Trade Act.  (The fraction of Wal-Mart political contributions to Republican Party candidates has declined from 98 percent in 1996 to 80 percent in 2004.)  

Meanwhile, the store has become the nation’s leading vendor of groceries, apparel and music. It is not too far behind in pharmacy and auto services. Next it plans to offer organic food and various banking services. Some 100 million consumers shop at Wal-Mart every week, and 85 percent of all Americans shopped there at least once in 2005. Not bad for a chain whose first store opened in Rogers, Arkansas, 1962.

Not surprisingly, Wal-Mart procedures have become a source of political friction along nearly every axis of its interface with the rest of the world — its wage and benefits policies, impact on local businesses and suppliers, product-selection practices, zoning and infrastructure requirements, design standards, and political influence.

Many of these facts are laid out coherently in a new article prepared for the Journal of Economic Perspectives, by Emek Basker, of the University of Missouri, the econometrician who, more than any other scholar, has studied the overall economic significance of the explosive growth of the giant chain. An earlier paper with Pham Hoang Van, Putting a Smiley Face on the Dragon: Wal-Mart as a Catalyst to US-China Trade, brilliantly illuminated the surge in U.S. imports that occurred after Wal-Mart abandoned its "Buy American" campaign in the 1990s. In the new study, she carefully surveys the welter of work on various aspects Wal-Mart’s economic impact that has been done, much of it narrowly framed, some of it highly partisan.  

(In a book last year, The Wal-Mart Effect: How the World's Most Powerful Company Really Works — and How It's Transforming the American Economy, Charles Fishman, a journalist, offered a parallax view. (The paperback edition has just appeared.) Fishman wrote last week of the Bharti deal, “Wal-Mart will be a sensation in India - as it has been in China and in Mexico. At the moment, there is just a single hypermart in the whole country, in Mumbai. Small individual US cities have more than that — Topeka, Kansas, has two Wal-Mart supercenters; Huntsville, Alabama, has four.”)

Basker identifies two key advantages that have propelled Wal-Mart to the top: technology and scale.  She doesn’t lay the same emphasis on automobiles and highways that I do, but on the role of the computer she is dead right. The company installed a mainframe in 1969 in its first distribution center. By the late 1970s, it had connected all stores, distribution centers, and corporate headquarters in a network. It was among the first to recognize the logistical importance of bar-codes, and by the late 1980s had installed bar-code readers in all its distribution centers. In 1990, it brought suppliers into the network with real-time inventory software (which migrated quickly enough to the Web). Today Wal-Mart is a leader in radio frequency identification tags.

What about the effect on employment? A new Wal-Mart store hires several hundred employees, according to Basker.  The number of applicants can be 5, 10, or even 25 times the number of positions offered. (When a new store opened in Oakland, Calif., last year, more than 11,000 people applied for 400 jobs.) Some local retailers contract or go out of business; others open for business. On balance, she says, the effect on local employment appears to be positive, even five years after Wal-Mart’s entry, but it is small.

So keeping Wal-Mart out of the market, as France has done, apparently costs jobs; letting it in, however, is no magic elixir of growth. Nor is there any reason to think that the company has yet exhausted the advantages that come from opening stores in relative proximity to one another.  The technique, dubbed “contagious diffusion,” takes advantage of economies of density in distribution, training and advertising, and probably aids Wal-Mart at the expense of rivals such as Kmart and Target, which pursue different strategies. And since there is no definitive data on hours worked or wages at Wal-Mart compared to other retail stores, it is not possible — yet — to evaluate the effect of Wal-Mart’s reliance on more part-timers than the stores it replaces.

Consumers gain from the store’s low prices.  The poor apparently gain the most.  In one survey, 53 percent of those whose annual earnings were less than $20,000 said they shopped at Wal-Mart “regularly,” compared with a third of those who made more than $50,000. The average annual household income of Wal-Mart shoppers is around $40-$45,000, roughly that of the US median; Target shoppers have incomes of around $60,000 and Costco customers around $74,000. Between them, these "big-box" retailers have fundamentally altered buying habits in nations around the world.

 In short, Basker writes, “Though the identity of the large retailers has changed over time, the criticisms leveled against them do not. Retail chains have been accused of paying low wages, not contributing to their communities, taking money out of communities, paying fewer taxes than local merchants, and turning America into ‘a nation of clerks’ as far back as the 1920s — almost word for word the accusations that are leveled against Wal-Mart today.”

What has changed with Wal-Mart, perhaps, is the sheer degree of political influence the giant retailer now enjoys. Wal-Mart hired its first lobbyist in Washington DC in 1998, but long before that it was expert in dealing with local governments to negotiate for zoning easements, infrastructure requirements, and other subsidies, or to resist attempts to limit access to local markets through zoning requirements, to impose minimum wages, or to mandate health care benefits.

With its aggressive expansion into global markets, both as purchaser and vendor, the company has taken its place at the political table along with other great multinationals — energy companies, metals manufacturers, software houses, aerospace firms, arms dealers, chemical and pharmaceutical companies, auto giants, and consumer product companies.  Nor is it just Wal-Mart that has gone transnational. Ikea, McDonalds, and Starbucks are other firms whose economies of scale have permanently altered the retail landscape.

So Wal-Mart and Costco have replaced Sears and Ward’s, just as highways replaced the railroads as our primary transportation network. But the railroads are still there. So are the rivers and the ports whose economic primacy the railroads usurped. Cable and the Internet have preempted television, but television is still there. So is radio. And so is the tendency of competitors to combine into a few giant firms, producing industrial structure we know as oligopoly.

Where there are oligopolies, historically, at least, there have been labor unions. The last quarter century has seen a period of unprecedented competition. Unions have suffered greatly as a result. There are no unionized Wal-Mart stores today in North America. When butchers at a store in Texas voted to affiliate a few years ago, Wal-Mart bought pre-packaged meat and shut the department. When workers at a store in Quebec last year voted to organize, the company closed the store.

The rise of Wal-Mart is a story of canny entrepreneurs taking advantage of technological change — a saga of cars, computers and globalization. Want to bet that the rate of fundamental innovation continues at the same rapid rate? That the level of intense competition of the past 25 years continues for another quarter-century? Or that there will be no unions in Wal-Mart stores 25 years from now?